Energy business AEI to sell $4.8 billion in assets

AEI thinks small as it sheds assets

TOM FOWLER, Copyright 2011 Houston Chronicle |
January 21, 2011

AEI, the Houston-based company that includes many of the late Enron Corp.'s foreign energy businesses, is selling off much of its assets in an effort to restructure as a smaller operation that will focus on international power generation.

The company said it will sell its interests in 10 operating companies to nine separate parties for $4.8 billion, representing 80 percent of AEI's total assets.

This includes selling Brazilian power distribution firm Elektro to Iberdrola and Colombian natural gas transport firm Promigas to Empresa de Energia de Bogota and others.

Jim Hughes, CEO of AEI, said the move is the result of a search for strategic alternatives after AEI withdrew its initial public offering in October 2009.

"This was a clean sheet exercise that evaluated all available alternatives," Hughes said in a statement. "We concluded that AEI should sell the vast majority of its regulated assets, return the capital to our shareholders, and plan to reorganize the company around a smaller business focused on power generation."

The funds received from the sales will be used to repay debt. The remaining cash will used to fund equity capital needs for various new generation projects.

After Enron's December 2001 bankruptcy, all of its international businesses — ranging from power plants to natural gas and power distribution businesses - were spun off into a separate entity that was put up for sale. There was little to link the businesses, which stretched over 14 countries.

In 2006, Ashmore Energy purchased the assets and changed its name in 2007 to AEI Services. By focusing on growth projects in emerging markets the company was able to make headway. In 2009, the company had $8.2 billion in revenue.

Hughes said the company will reorganize around its remaining power generation assets in Asia, Central America and the Caribbean, and South America, and will continue planned power plant projects in Guatemala, Peru, Argentina, Chile, and China.

The remaining business will represent 2,236 megawatts of generating capacity with $190 million of earnings and $400 million of net debt. Another 1,000 megawatts in potential new pro-jects are under development and over 2,000 megawatts of longer-term projects are in the works.